Correlation Between Hanil Iron and Samyang Foods

Can any of the company-specific risk be diversified away by investing in both Hanil Iron and Samyang Foods at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hanil Iron and Samyang Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hanil Iron Steel and Samyang Foods Co, you can compare the effects of market volatilities on Hanil Iron and Samyang Foods and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hanil Iron with a short position of Samyang Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanil Iron and Samyang Foods.

Diversification Opportunities for Hanil Iron and Samyang Foods

-0.43

Correlation Coefficient

Hanil Iron  Samyang Foods

Very good diversification

The 3 months correlation between Hanil and Samyang is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hanil Iron Steel and Samyang Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samyang Foods and Hanil Iron is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hanil Iron Steel are associated (or correlated) with Samyang Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samyang Foods has no effect on the direction of Hanil Iron i.e., Hanil Iron and Samyang Foods go up and down completely randomly.

Pair Corralation between Hanil Iron and Samyang Foods

Assuming the 90 days trading horizon Hanil Iron Steel is expected to under-perform the Samyang Foods. But the stock apears to be less risky and, when comparing its historical volatility, Hanil Iron Steel is 2.56 times less risky than Samyang Foods. The stock trades about -0.07 of its potential returns per unit of risk. The Samyang Foods Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  23,230,100  in Samyang Foods Co on October 8, 2024 and sell it today you would earn a total of  50,169,900  from holding Samyang Foods Co or generate 215.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hanil Iron Steel  vs.  Samyang Foods Co

Hanil Iron Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hanil Iron Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hanil Iron is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Samyang Foods

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samyang Foods Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samyang Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanil Iron and Samyang Foods

The main advantage of trading using opposite Hanil Iron and Samyang Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanil Iron position performs unexpectedly, Samyang Foods can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Samyang Foods will offset losses from the drop in Samyang Foods' long position.

The idea behind Hanil Iron Steel and Samyang Foods Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.